The consumer electronics business is still facing tough times, but there are some glimmers of light, writes E&T.
There is a Vegas ‘sound’. It is an incessant synthesised burble that accompanies the tumblers in bank after bank of slot machines, punctuated (very, very occasionally) by some off-key chimes that signify one paying out. Normally, this din is inescapable. But times there were times earlier this month when you had to strain to pick it out.
The start of January is normally a mini boom for Las Vegas. The annual Consumer Electronics Show (CES) still brings more than 100,000 visitors into the city. But in 2010, there were more signs that the broader economy and this especially important market remain jittery. Hotels that would normally hike their rates for CES struggled to fill rooms at under $100 a night, even in some cases when they went as low as $40. There was no taxi queue. Reservations were not often required for fine dining.
CES organiser the US Consumer Electronics Association (CEA) aims to set the tone for the show a couple of days before its official opening by having its analysts offer an overview of trends and a global forecast. Not surprisingly, it is their job to accentuate the positive. At the same time, however, these are sober men.
Their enthusiasm concentrated on star products more than what is happening at the macro level. CES 2010 thus marked the beginning of a real 3D display market, although everyone immediately warned that it may take several years to reach serious volumes. In the shorter term, it also saw more ‘apps’ and Ethernet connectivity being integrated into mass-market displays, allowing them to directly access online movie rentals and other Web-based content.
Netbooks are becoming ‘smartbooks’ and are scheduled to double again in size as a market in the US this year. Along with eReaders, they are filling a void in the market for kit with screen sizes between 5in and 15in and allowing vendors to experiment with new business models.
This, along with the ongoing Apps Revolution, spurred by the iPhone/iTouch, indicate it is not all doom and gloom. However, the CEA’s chief economist and director of research, Shawn DuBravac, noted that 2010 will remain a “year of recovery” even if the process itself began by his reckoning last June. And there are some worrying aspects to the data.
In their 2010 forecast, the CEA and market research group GfK have the global electronics market flat at $681bn, following a 2 per cent decline in 2009 to that number from 2008’s $693bn.
Breaking that figure down raises a number of issues. In 2009, the US market is thought to have contracted by 12 per cent and CEA/GfK now see that process continuing to spread across the globe this year. The next stop will be western Europe where even the fact that most of its major economies are out of recession will not, according to CEA director of industry analysis Steve Koenig, head off a 9 per cent fall in CE revenues during 2010. “It is a sad picture,” he said. “All the major product categories are under duress, laptops in particular.”
A further issue is that, while China took strong action to free up local credit and maintain healthy growth in its domestic electronics market, the contributions that it and the other three emerging ‘BRIC’ economies (Brazil, Russia and India) can make to the overall numbers does not yet outweigh the negative impact of the slowdowns in the US and western Europe.
However, 2010 will for the first time see combined sales in Japan, China and the rest of Asia match those from North America and western Europe at around $210bn ($209.1bn against $211bn, respectively). Koenig said that CEA/GfK sees this trend continuing in earnest with the bigger growth segments in consumer electronics gradually shifting east.
On the show floor most companies also saw 2011 as the year of resurgence, with several privately referring to launches that had been postponed but which are now being ramped up as the recession eases. But there was also talk about this downturn heralding that fundamental shift towards Asia. It is one that has been much anticipated but its timing is such that some companies are now looking at how to quickly adapt, having been forced by the recession to cut back on much of the necessary development work. That may be the dilemma that will mark 2010 when it comes to the history books.